Angela Rayner recognised the importance of local developers, Steve Reed must do so too - Cyril Davydenko
Before plunging the Labour party into chaos, Angela Rayner was on the cusp of achieving meaningful progress on planning reform. Beyond the general overhaul of the planning system, her attention to the concerns of small and medium developers (SMEs) was shaping up to be one of the most crucial aspects of new planning legislation.
With none of these reforms written into law, the new Housing Secretary, Steve Reed, must not let the Labour turmoil distract him from following through with these proposed changes.
Last year, Rayner spearheaded the Planning Reform Working Paper: Reforming Site Thresholds and put forward a landmark Planning and Infrastructure Bill, both of which aim to speed up the delivery of housing and infrastructure, yet for now, none of these have been passed into law.
The most important proposed measures range from expanding the power of planning officers to streamlining the environmental regulations. However, these headline-grabbing policy changes make it easy to overlook some of the important policy tweaks, hidden in the depths of the Working Paper. The most important one is the proposal to introduce a medium site threshold.
Currently, the planning regime distinguishes only between small (under 10 houses) and large (10 or more houses) sites. This means that an SME delivering 12 houses faces the same regulatory requirements and scrutiny as a large developer building hundreds of homes at once. In practice, this results in a longer and more costly application, screening and approval process, often complicated by local politics even when all legal requirements are met.
It is clear that this punitive regime not only contributed to the housing crisis but also led to the decline of the share of developments delivered by SME in recent decades. In the 1980s, SMEs were responsible for building around 40 per cent of new homes; today, their share has fallen to barely 10 per cent.
This system penalises SMEs, as they often rely on quick cash flow and rarely have the funds to influence local authorities or the time to navigate complex bureaucratic processes. Conversely, this reliance on quick cash flow provides SMEs with a strong incentive to deliver projects as swiftly as possible, making them a key part of solving the housing crisis.
Beyond the housing dimension, SME developers also generate significant benefits for local communities and economies. Naturally, they tend to rely on local supply chains and employ local workers. Moreover, they are responsible for 70 per cent of construction apprenticeships – a commitment vital to the future strength of the UK’s construction industry.
Alongside these economic and employment benefits, SMEs often maintain stronger relationships with local communities. Since local developers are rooted in the areas where they build, they are far more likely to understand the needs and concerns of the town’s population than large, often London-based, developers.
Rayner clearly understood the importance of local developers. Her proposed ‘medium-site’ threshold would apply to the developments between 10 and 49 houses.
Crucially, the government is considering exempting this threshold from the Building Safety Levy and allowing planning officers to make swift decisions on medium sites. These measures were welcomed by the Federation of Master Builders, whose representative said that “ the UK’s small house builders stand ready to deliver the homes Britain needs, but the planning system has stifled their growth”.
Internal Labour turmoil must not distract the government from implementing the reforms outlined in the Working Paper. Planning remains one of the few areas where the government can claim success.
Cyril Davydenko is a research analyst at Bright Blue think tank.